Synlait Milk Limited (SML.NZ) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Synlait's Full Year Results Conference Call. it's great to have so many of you on today's call and a real pleasure to introduce you formally to our new CEO, Richard Wyeth, who joined Synlait earlier this year in May. He's joined, of course, today on the call by our CFO, Andy Liu, who many of you will now know. Rich and Andy will speak today through our investor presentation released this morning and then we'll open the line for Q&A. [Operator Instructions] Richard, over to you.

Thanks, Hannah. Good morning to you all. Thank you for joining us on Synlait's Full Year 2025 Results Call. To indulge some sporting analogy, FY '25 was a year of 2 halves of. We won the first half and celebrated a return to profitability, but over the second half was challenging on a number of fronts, and the impact of those will be cleared in today's presentation. Andy and I will go over those in detail throughout the presentation. But before that, we have some good news. If you please turn to Slide 2. We have entered into a binding conditional agreement to sell our North Island assets to our valued customer and global health care leader, Abbott. These consist primarily of our Pokeno factory in 2 Auckland sites in the blending and canning facility at Richard Pearse Drives and Jerry Green, which is the warehouse. The sale price of the transaction is USD 178 million, which equates to approximately NZD 307 million -- NZD 307 million. Abbott has confirmed it will onboard most of the people who work on these sites, which is a fantastic outcome for both our people and also for the local community. The targeted completion date for the transaction is 1 April 2026. And the sale will be subject to various conditions, including similarly obtaining shareholder approval and Abbott receiving consent and the Overseas Investment Act 2005 and normal consents such as regulatory consents from the likes of [ MPI. We released a notice of meeting with detailed information on the sale to inform shareholders before they vote on the transaction at Synlait's Annual Meeting on 21 November 2025. And also like Bright Dairy, our major shareholder, has confirmed it will vote in favor of transaction so the requirement for shareholder approval will be achieved. This is a real step forward for Synlait. The proceeds of this sale will be used to pay down debt. It will mean that by the end of FY '26, we are largely debt-free with the exception of working capital facilities. In short, the sale will deliver a stronger, simpler and more secure Synlait where we have greater space to focus on our South Island operations and the ability to carefully and strategically review our strategy for Dunsandel. Goal is to release an updated strategy at our half year results in March 2026. But in the meantime, we're certainly very excited, and this is an outstanding win for both Synlait and Abbott. Moving on to Slide 3. I've now been in the business for just over 4 months as CEO of Synlait. I was attracted to this role due to the company's strategic strengths. It has world-class assets and its foundations are strong. Dunsandel was located in the heart of Canterbury's dairy sector with good connectivity to global markets and the ability to produce goods at scale. The company also enjoy strong demand from our global customers. We've now spent a short amount of time in the business. I've identified 3 immediate needs that we need to focus on. First and foremost, we need to improve our operational stability at Dunsandel so we can consistently deliver for our customers. I'll talk to you more about that in a moment. Secondly, we need to reduce complexity to deliver a financial uplift. The North Island transactions will assist with that. And finally, there is a need to reset the high-performing culture within the business. Synlait's focus on great people have been through a huge amount of challenges over the last few years. My observation coming into the business is that it's very much a culture of reactivity driven some of those challenges. I want to reset the business so we can really focus on proactive performance. To that end, our focus for FY '26 will be very much targeted on operational stability. To assist with that, we are recruiting and onboarding a new Canterbury-based Chief Operating Officer who will be responsible for delivering a [ wrath ] of improvements in that area and also ensuring that we can deliver the North Island transaction by 1 April 2026. We're also embedding our values framework, the Synlait spirit, in the short term to allow us to improve our culture. Moving on to that focus in Slide 4. You will see focus areas internally that have been done, The Big 6 for '26. Top of that list is operational stability. That should come as no surprise to many of you. As we announced to the market in July, Synlait has had manufacturing challenges earlier this year. The impact of those is clear in today's result with one-off costs totaling $43.5 million. While the manufacturing challenges are largely behind us, operational stability must remain a core focus alongside quality, performance and customer satisfaction. And to those who're focused on financial resilience, it was great to see the banking facility come through last week and include the North Island sale, then strengthening our financial performance has largely complete, we now need to deliver on culture, operational stability and quality, and that will lead to strong overall financial performance. We'll move through now to Slide 5 to look at our results at a glance. We are reporting total group EBITDA of $50.7 million today, which is an increase of $54.8 million on FY '24. Our bottom line is a net loss after tax of $39.8 million, which is an improvement of 78% year-on-year. As mentioned, this reflects costs associated with challenges at Dunsandel. Adjusted bottom line is a net profit after tax of $0.8 million, which shows you Synlait's recovery was on track. Pleasingly, Synlait's debt level has decreased by 55% during FY '25. Of course, most of this was [indiscernible] last October's equity raise, but not lifting our trading performance has added to that with net debt now down at $250.7 million. As mentioned, the proceeds from the North Island transaction will largely [indiscernible]. Group revenue increased to a record $1.8 billion or 12%. Operating cash flow was up 451% to $165.5 million, and gross profit increased to $105.3 million. I'm delighted to confirm that our final milk price for the 2024-2025 season, is a record $10.16 per kilo milk solids. Add to that Synlait's incentive program, which averages after $0.30 per kilo of milk solids and our secured milk premium of $0.20 per kilo milk solids for our South Island farmers, and you could see that our Synlait suppliers will be very happy. However, our average milk price or payment to South Island farmers will sit $0.50 above the farm gate milk price. That should result as a set in some very good Christmas presence for many of our farming staff. I will now hand over to Andy Liu, our CFO, who will take you through some more detail on the financials.

Thanks, Richard. Good morning, everyone. Let me take you both through Synlait's financial results for the year '25. This year's results shows a very strong improvement and a fresh sense of progress across our main business areas, even though we faced some manufacturing challenges at Dunsandel. Let me begin by outlining the key highlights on Slide 7. The Advanced Nutrition segments experienced robust customer demand and demonstrated strong growth in new product development. These sales translated into a $21.1 million increase in underlying gross profit, underscoring the strength of our customer relations and our ability to innovate and bring new products to market. Our ingredients business achieved a notable turnaround from FY '24, recording a $26.6 million improvement. This was driven by effective foreign exchange management and a strategic shift to value over volume. Although [indiscernible] return did not always favor our current product mix, our enhanced risk management approach proved beneficial. The Consumer and Foodservice segment achieved a $9.3 million increase in our gross margin. This was largely attributed to the outstanding performance of Dairyworks and ongoing growth in our UHT print portfolio in existing and new markets. We successfully reduced SG&A costs through disciplined cost control measures and a strong focus on eliminating wastage. Financing costs also reduced significantly, supported by better cash flow management and the recovery in trading performance. On to Slide 8. In FY '25, Synlait's total revenue increased 12% to $1.8 billion after a flat FY '24. Growth was broad-based. Advanced Nutrition up 8% on high volume and a new neutral base powder successfully launched in Southeast Asia. Ingredients revenue increased by 7% on pricing and favorable foreign exchange. Our consumer base business unit reported a 12% revenue increase with growth in export markets helping to offset ongoing pressures in the domestic market. Revenue and volume from Foodservice, driven by UHT cream, almost doubled compared to the prior year, with growth extending into Asia and the Pacific. Underlying gross profit increased to $142.5 million due to disciplined execution and strategic improvements company-wise. On Slide 9, you can see that our focus on operational efficiency and working capital management has resulted in a remarkable recovery in cash flows. Our operating cash flows increased by $213 million, reflecting improved trading performance and optimized working capital management. CapEx investment remains at low level, a further 23% reduction compared with prior year with a focus on business continuity, growth initiatives and the regulatory compliance as well as strategic digitalization, AI, cybersecurity to manage risk and opportunities. Net debt decreased by $300.9 million or 55% and due to capital injection and improved cash flow performance. Financing costs contributed $48 million to net debt. That is a $7 million improvement on FY '24. These costs are expected to reduce further in FY '26 with the completion of our refinancing. Our balance sheet is much stronger, and we are targeting a net senior leverage ratio below 2.5x in FY '26. In summary, Synlait's FY '25 results reflect the company regaining strength, simplifying its operations and establishing a platform for sustainable and profitable growth. The sale of North Island assets mark an improved turning points, significantly strengthening our balance sheet by reducing net debt, improving leverage ratios and restoring our creditworthiness. With the streamlined business model and a solid financial foundation, Synlait is well positioned to invest in strategic growth, pursue new opportunities and deliver sustainable value to our shareholders. Financially, Synlait is now equipped to support and execute a new future strategy with confidence and resilience. Thank you. I will hand you back to Richard now.

Thanks, Andy. We'll now go through an update on each of our business units. If you turn to Slide 11, first the Advanced Nutrition. So for FY '24, we saw an overall uplift in volumes due to strong customer demand. Our achievements for that year include an expansion of our customer base. We also had a new record in lactoferrin sales volumes, which were up 12 metric tons. And we also had the successful launch of our Nutrabase powders, which has secured multiple customers in Southeast Asia. Our focus going forward for this financial year will include working with The a2 Milk Company to support growth in China, further expanding the Nutrabase range and looking to deepen the relationships with our ingredients customers so they're more aware about Advanced Nutrition capability and exploring new sales channels and value-add products to uplift returns on lactoferrin. So that's Advanced Nutrition. Moving through to Slide 14 and the Ingredients business. To those who know the Synlait story, you will recall, we strategically moved away from fresh milk processing at the North Island assets last year. This obviously impacted our ingredients overall volume, which decreased to 108,000 metric tons. However, offsetting that was improved premiums over the last 12 months, which was an outstanding achievement. And obviously, we had increased revenue due to strong ingredient pricing. We also saw progress in customer and market diversification with expansion into the Middle East. Looking at our focus areas for ingredients, we'll be further uplifting the premiums we achieved last year; continued expansion of our ingredients portfolio; and amplifying market awareness of our high level of quality and consistency. Moving now to Slide 13. You will see an overview of our Foodservice business performance. This is the UHT cream, obviously, a very popular product, certainly in China. For FY '25, it saw us successfully launch our second-generation cream, which has further increased product stability and market. To deliver record volume last year of 8.41 liter bottles manufactured at our Dunsandel site, every single one of these was sold. We had demand remains exceptionally strong for this product in multiple global markets, and our focus will be to continue to grow that into next year. We're looking to grow margins [indiscernible] that has been challenging. The real unlocker for our foodservice business is to continue to drive volume. And it's really pleasing to see we've picked up a new distributor which is sending product into Fiji, and we're working more broadly to increase that volume overall for that foodservice business. Moving on to Slide 14, the Consumer business. FY '25 was another outstanding year the Dairyworks which drives our consumer business. I'd just like to acknowledge Tim, who is the CEO of that business, who was acting CEO of Synlait and also [indiscernible] to his shoes for a period of time. They've done an outstanding job, once again, for FY '25. The Synlait performance was driven by offshore markets with softer growth in New Zealand due to obviously cost-of-living pressures and increased milk prices. Overall gross profit for our consumer business was $39 million, up from $30.6 million in the prior year. And offshore Dairyworks saw a 53% growth in cheese export volumes with the lower success across the Tasman. Dairyworks is now the fastest-growing cheese brand in Woolworths Australia. The Alpine brand has also launched in foodservice then, and both Alpine and Dairyworks products ranges are now in Costco Australia. The focus for FY '26 is to continue delivering value in new product lines to domestic companies and further growing our export volumes. So a real stand out for this year. Moving now to Slide 15, which is milk supply. As I mentioned earlier today, we have confirmed a record milk price, which is significantly up on the seasons opening forecast. This should deliver some very heavy farmers, which has been an important focus to Synlait across FY '25. Earlier in the year, our on-farm team did an excellent job of securing our milk supplies for the current season after working to encourage farmers to withdraw their [ cease ] and onboarding 11 new farms. This is helped by -- this was helped by additional secured milk premiums along with new guarantees around the milk price at advance rates. We will continue to focus on finding new ways to add value on farm. One of the focus areas will be improving our digital offering and continuing to support our on-farm through Whakapuawai program, which helps [ Riparian ] planting on farm. We'll also look to launch our milk price offering in FY '26. Now on to Slide 16. FY '26 presents a valuable reset for Synlait, as you well know. As we've already said, the sale of our North Island assets will strengthen Synlait's financial position considerably with the process used to significantly reduce debt. Given the scale of the strategic reset, we will not provide further financial guidance for FY '26. Our focus is on executing the North Island sale and building a simpler and more focused Synlait in Canterbury. We are committed to making the most of this opportunity and aim to have an updated strategic plan in place by March 2026. So moving through to Slide 17, key takeaways from today. As we've noted, the sale of our North Island assets will seasonally become a stronger, simpler and more secure business. Financially, we will deliver a full and final balance sheet reset [ in in ] the company's survival phase. And strategically, it simplifies our focus and opens the door for us to explore new opportunities here at Dunsandel. Andy and I will now take questions.

[Operator Instructions] Your first question comes from Sean Xu with CLSA.

My first one is around your manufacturing challenge on Dunsandel facility. It seems to be a recurring issue now. I'm just very interesting, though, what's the processing improvement can be powered to FY '26 to prevent these kind of operational disruption going forward?

Sorry, I just didn't quite hear the second part of the question.

Prioritize this in FY '26 to prevent same [indiscernible].

Yes. So I appreciate there has been a number of manufacturing challenges for a period of time. And certainly coming in and being relatively new to the business, it's a focus for me. So as I mentioned, for our [ FY '26 ] focus on operational stability is key. What I can say is that there are a number of one-off issues, and we just need to work through those systematically root cause analysis and fix those issues. We are now comfortable with we're largely through it, but as I say, the next 6 months is very important for us.

My second question is around the a2, the China labeled production. My understanding is that requiring new registration renew in calendar year 2027. I know that might be at early stage, but if I remember, the last time registration with [indiscernible] takes a long time. I'm just curious if you think can give us some indication on the time line of when to start for this process.

Yes. So we've already started that process. You're quite right, FY '27 is key. And so we've been working on that already for a fairly long period of time. There's a bit of capital required going forward. And we're working with both a2 and Synlait quite closely to make sure we're ready for that.

If I may just quick checking a very quick question, last one. With Bright being your largest shareholder, I'm just curious to know, is there any collaboration you can leverage their conduction distribution channel in China to expand your market there?

Yes, I mean, Bright is obviously a very supportive shareholder of us, and we are working with them. And I think there's good opportunities. I mean, we've got a very strong working relationship with Bright. So I think as part of our strategy reset, we will certainly be looking at what opportunities we have to work with Bright.

Your next question comes from Stephen Ridgewell with Craigs Investment Partners.

And first of all, congratulations on the sale of Pokeno. It's a big one for shareholders. With that equity raise a year ago, 2 of the big 3 challenges that have been facing some of been overcome. So well done in progress. My first question is on the use of proceeds from the North Island asset sales and Canterbury management or potentially for the Chair. If you use the proceeds to pay back debt, you, Synlait, could be in a position where it's got $74 million thereabouts of debt on the balance sheet. But the comments that you also talked to the proceeds providing an opportunity to -- an opportunity to strategically diversify. And I realize it's an early stage, but I'm just interested in the sort of early thoughts the company has on the extent to which those proceeds will be used to pay down debt and the extent to which some of the things have got capacity to make acquisitions or other growth investments that may be more organic. And then related question is post the sale proceeds for the company and to operate a lower net debt-to-EBITDA ratio than the 2.5x kind of flat today.

Yes. Thanks. I'll take probably the first part, and Andy may chip on that. So certainly, initially, we'd look to obviously pay down as much debt as sensible. In terms of longer term, that will be clearer through the strategic review that we can update in March. And just I guess my final comments first perspective, which I'll share with the Board is that, I mean, I'd like to see our debt-to-debt equity ratio is sitting at about 20% to 25%. I think that's prudent. We've seen that as a good balance when it gets to 45, 50, it doesn't really work. So that will be my intention going forward. Andy, do you want to add anything further?

No. I said actually that for our refinancing, we just finished it last Friday. That's why we're still in the too early stages just to talk about regarding when we get the funds, what we will do. But as Richard already mentioned, it is principally definitely to just reduce our debt in order to just to keep it at a very reasonable levels and also seeking further opportunities. So we see the key point. Stephen, just tried to make sure, what's your second question regarding the debt-to-EBITDA level?

Yes. Just whether the company would like to operate at a lower net debt-to-EBITDA ratio, lower than 2.5x going forward, in particular if we kind of look through a2 milk label volumes migrating to the Pokeno site in the next year or 2?

Yes, let's say that for the moment, we still see the 2.5x is still the reasonable one. That's why we don't think that we are changing it for the moment.

Okay. Look, if you keep it at 2.5x, does suggest potentially quite a lot of firepower for acquisitions. But as you say, we need to a -- but long to see we land there.

[indiscernible]

Yes. And then look, I guess, as well, just on the -- in terms of the impact of asset sales, we can see the proceeds $307 million coming through, which is great. But can you give us -- can you hear me?

Yes.

Yes.

Great. Can you just give us a sense of kind of the EBITDA being generated from those assets and the feel like on a normalized basis in the year just gone. My understanding was Pokeno was kind of burning $35 million a year at EBITDA level. But just if you can give a rough steer as to the EBITDA loss that those assets generated in [indiscernible]?

Yes. So I can quickly jump to these questions. Our FY '25 numbers that I said, once we get rid of the North Island, we are thinking about $5 million to $10 million kind of the EBITDA to be improved because the FY 25 that the plant is more field, more demand, that's why the level is not as high as what we said before. So $5 million to $10 million, the EBITDA impact.

Okay. That's helpful. And then just one last one for me. Just on the impact of a2 Milk's planned migration of English label volume from Dunsandel to its soon-to-be-acquired Pokeno plant. Can you give us a rough estimate of the EBITDA impact that Synlait's kind of planning for? Is it reasonable simply to take the gross margin per tonne by the volume? Or are there other things to consider? For example, does the cost out, the company connection other factors such as the diseconomies of scale at lower production formula. So I think there's obviously a key issue of the market comment to the FY '27 and beyond time period. I mean, some thoughts on that would be quite helpful. How you -- what the impact is and then the mitigation factors, the ways that you can mitigate that impact?

Yes. So Stephen, sorry, that because these kind of numbers can be really very commercial sensitivities. So yes, I can't answer that very directly.

Okay. Well, I guess just as an opportunity to make some comments because I guess as analysts, we have to take a view in their own numbers.

Let me take it offline and just think about which kind of information we can provided [indiscernible].

Your next question comes from Adrian Allbon with Jarden.

Maybe just a follow-on from Stephen's question. What -- [ 4 months ] since the [indiscernible], Richard, what sort of cost opportunity do you find in the Dunsandel asset going forward but initially as you sort of deal with the transition of [indiscernible] and [indiscernible].

Sorry, it's just a bit hard to hear. Can you have another go at that, please?

Sure. Is that better?

Yes, it's a little bit better, yes.

I was just -- as a follow-on to Stephen's question, I was just wondering what's the cost-out opportunity? Is that better?

Yes, that's great. Yes.

Just as a follow-on to Stephen's question, I was just wondering what the opportunity you see for cost out at Dunsandel next year?

Yes. Look, I think, as I say, when we reset the business with a focus just on Dunsandel, there will be some opportunity. And that's, again, too early to get into the specifics unfortunately, but certainly, we'll be able to provide more of an update at the March announcement.

Okay. Would it be useful as a starting point for us to kind of look to sort of FY '18 as a sort -- as some sort of benchmark?

Andy, I don't know whether you want to comment on that. I haven't gotten [indiscernible] numbers in my head at the moment. So.

Yes. So Andrew, that's regarding FY '18, it's really far times ago. So what I can propose is that let me work out some numbers and try to provide you on some reasonable figures. For example, based on FY '25, we said that we are saving about $10 million just with still including the North Island. That's why we think about definitely the number should be higher than the $10 million. But let me just walk out some numbers come back to regarding how it can simulate it focus on [indiscernible].

Yes. What I can say in terms, I'm not sure what you look at, but what I do know, given I've only been in the business for a short time is what happened sort of even 2 or 3, 4 years ago, in terms of throughput on the dry at Dunsandel was that we won't get as much throughput. As we're focused on higher quality, it means we have to derate the drivers somewhat now. In terms of the specifics, I haven't got those in front of me today, but it does mean we can't just go look at the past as a precursor to the future necessarily because the standards have improved and China's requirements continue to improve. And all of those things mean we have to -- it does take some capacity out -- not a lot, but it does take some capacity out of the [indiscernible].

Okay. Just related to that, can you kind of give us a steer on what your sort of multiple or what your contracted multiple is on next year?

Circa 70 [indiscernible].

Okay. And then I guess, look, in a [indiscernible], are you actually expecting EBITDA to be higher this year? And I'm presuming that the net debt is probably going higher as well because you've got all these premium payments to farmers coming up shortly.

Andy?

So let's say for this year compared with FY '25, yes, you are right that we will pay some additional incentives to our farmers. It can be some challenge for the EBITDA. But as said, regarding the FY '26 that we are more focused on saving the North Island, we will try our best, firstly, to focus on production stabilities, and that's why that we can't share any kind of our target for the moment.

Just if you assume that the North Island business was in the numbers, which is probably what most of us are going to have to do, but would you expect the net debt to be higher this year? Like giving your farmer incentive payments [ at June? ]

I should say about the similar level than this year because yes, farmers payment, but also do remember we have the [ EBIT ] has to generate the cash. So that's why we do think the net debt should be a bit better than the [indiscernible]

Including [indiscernible]

Your next question comes from Matt Montgomerie with Forsyth Barr.

Maybe just on manufacturing issues, Richard, I suspect it's unlikely you'll provide detail on what they were. But sort of a footnote around them being largely resolved. It would be interesting if you could just maybe talk through that, what largely means what you need to see to get them resolved and yes, just any further color, I guess, to give us confidence that they have been isolated to the period that you've outlined previously.

Yes. Thanks, Matt. Good question. That was my [indiscernible] Look, I said that then, the nature of these businesses is that they're very complex. So I'm making Advanced Nutrition, for example. You've got ingredients from 10 to 40 different ingredients. You've got complex processing. So I'm relatively conservative by nature. So I said largely because while the issues we had from January to July are largely behind us, to say they'd go on forever is you just can't do that. And look, in terms of the nature of those things, they are a combination. We've got people, process, systems, engineering. There's a whole raft of things that can go wrong. A rotary valve can be put in some -- it might be an ingredient issue or supplied incorrectly. So there's so many things that can go wrong in making this Advanced Nutrition. So the issues we've had in the first half of the calendar year are largely behind us. But that's why I'm turning up the focus on operational stability going forward. So I am very comfortable with the issues we had in the first half of the year. We have largely doubled all of those, but you just never know what can be around the corner. So the way you deal with that and the processing operation like we are, as you have very good systems, processes and you have well-trained people. So that is the area that I'm focused on at the moment.

Awesome. That's very clear. Just on Dairyworks, I think EBITDA of around 23%. Clearly, it's been a good business over the last 5, 6 years since you've owned it. And I think from memory at the time, I think the target was around 20% of EBITDA. So maybe just from you, Richard, how you think about that business going forward, maybe anything where you see in, say, 3 to 5 years from an earnings point of view?

Yes. Thanks. Andy might be able to put some numbers around it. And a general comment, I'd say I think it's got massive opportunity. I think the team there are fantastic. Tim and his leadership team has done a great job. So I think there's a real opportunity. The thing about that business is that you can just continue to scale it up. There's no sort of restrictions on growth, and I think that's what's exciting. They can procure a product, they can add value to it, and they can just put it into different markets. They've got good market share in New Zealand. They're now targeting Australia, and I'd like to given to look even beyond that. So that's sort of my general comment. In terms of the numbers around that, Andy, I don't know if you've got any more flavor to add to that.

Yes. So let say, for FY '25, our revenue for Dairyworks is about 12% increase, but gross profit is about 28%. So it really shows that other than the volume growth, it's also internally [indiscernible] from the focusing always their strength for the efficiency productivity also supported these numbers. That's why we still said this is a very good business that's in a good trend and also expected to have further growth.

And might I one more, just a small one. Andy, the depreciation associated with the North Island assets, what's the EBIT drag?

Sorry. Can you repeat your question? What do you mean the EBIT drag?

Just following up from Stephen's question. What's the D&A sitting over the North Island asset for FY '25?

It's around about $1 million per month.

[Operator Instructions] Your next question comes from Nick Mar with Macquarie.

Could you just talk through the net debt number. I think the trading update right at the end of your financial year, you were sort of guiding towards 300 and you came in at 250. How did that change so much?

Yes, sure. I can just take this question. So what changes mostly because of we have the higher customer demand. And the customer demand also trigger some additional deposits. So this is how it comes. Regarding one of the reasons, another reason is that, as you know, we also have the receivable assignment. So end of the month, there is some kind of additional kind of deliveries, which we get the receivable assignment earlier. That's why it is mostly the 2 kind of the main driven for the $15 million just reduced. Yes, better.

That's good. And in terms of what you're selling with the North Island divestment, sort of you mentioned the kind of lease warehouse as well. Does that sort of line up to what the North Island CGU was when it was [ impaired ] at the end of FY '24. Just trying to work out the price relative to the holding value? And also, do you have any sort of breakdown of the value by sort of PP&E versus net working capital?

Yes. So to answer your question, yes, it's roughly the same regarding our CGU for North Island last year when we shared the numbers. So what I can propose you is that you can take the last year annual report, the numbers. And yes, this is kind of be the baseline regarding the CGU in the net asset value for [indiscernible].

Yes. And the sort of mix between sort of PP&E and working capital?

So working capital one that -- because here what we said is regarding the total $178 million, it's $170 million for the PP&E and $8 million for the working capital less adjusted inventory.

There are no further questions at this time. I'll now hand back to Mr. Richard Wyeth for closing remarks.

Thanks, everyone, for joining the call today. I look forward to meeting with many of you over the coming days. And in the meantime, if you've got any questions, you can just follow those up with Hannah. And that concludes our call for today.